Newspaper's tax woes worry Brunswick officials, industry expert

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BRUNSWICK — On July 15, the town Finance Department sent letters to all businesses and individuals that have not paid their 2010 real estate taxes.

First on the list, with nearly $77,000 outstanding, is Brunswick Publishing LLC, better known as The Times Record newspaper.

The paper also owes approximately $63,000 in personal property taxes from 2009 and 2010, and its commercial publishing arm, Alliance Press, owes $12,500 in personal property taxes from the same years.

Like every other tax delinquent in town, The Times Record has until Aug. 22 to pay its real estate taxes before the town obtains a lien on its property to ensure the town will be repaid if the property is sold. If there are still outstanding taxes by February 2013, the town can foreclose on the newspaper’s land and buildings.

The outstanding taxes aren’t the only sign of the newspaper’s financial condition. At least one former writer is suing for back pay in small claims court; others have stopped writing for the paper.

The newspaper’s workforce has also been shrinking. On July 22, the editor of the editorial page, James McCarthy, announced his departure; Jonathan White, the former features editor, left earlier this spring. Several jobs were eliminated in 2008, shortly after the paper’s current owners received access to a $5 million tax-free bond through the Finance Authority of Maine to finance the acquisition.

Circulation has been dropping, too. In 2009, The Times Record claimed sales of 9,800 Monday-Thursday and nearly 11,600 on Fridays. According to the Audit Bureau of Circulations, those figures had declined 21 percent through March 31 to 7,700 Monday-Thursday and 9,100 on Fridays.

Chris Miles, The Times Record’s president and publisher, did not respond to phone calls, an email, or an in-person visit seeking comment for this story. George “Scoop” Sample III, the Pennsylvania-based owner and president of Sample News Group, which owns The Times Record, did not return a phone call.

Kelly McBride, a media ethics expert at the Poynter Institute, a journalism school in St. Petersburg, Fla., said that unpaid taxes are a worrisome sign.

“Journalism is supposed to help other people fulfill their civic role, and if you’re not fulfilling your civic role – and paying taxes is part of that – you may lose a little bit of standing with the audience as you try and and inspire others to engage in holding government accountable,” McBride said.

The Times Record paid its 2009 real estate taxes in October 2010, a year after the first half of the taxes were due and two months after the town obtained a lien on the property. The last time the newspaper wrote a check to the town for unpaid taxes was in June 2010, when it put $25,000 toward personal property taxes, which are assessed on the newspaper’s printing presses, computers, and other equipment.

By not paying its taxes, the newspaper is also forfeiting reimbursement it would have received under town and state tax programs.

The newspaper qualifies for the state Business Equipment Tax Reimbursement program, which refunds the local personal property taxes of qualifying businesses up to 100 percent. Businesses must first pay their taxes, and receive refunds the following year. The Times Record applied for and received reimbursements every year from 1996 to 2007, according to Sharon Gallant, senior tax examiner at Maine Revenue Services.

Because the newspaper hasn’t yet paid its 2009 and 2010 taxes, it is forfeiting a reimbursement that in years past has been up to $50,000, Gallant said.

That worries John Eldridge, Brunswick’s tax collector and director of finance.

“It’s a reimbursement program, so you would think that as a taxpayer, you would want to pursue that program,” Eldridge said. “It raises a real concern.”

In addition, The Times Record is eligible for a $10,000 refund on its taxes as part of a tax increment financing agreement that Town Manager Gary Brown said is on hold until the taxes come in. There is no clause in the TIF that prohibits the tax refund in the event the newspaper pays late.

In January, the town took a step toward recovering some of the newspaper’s unpaid personal property taxes by obtaining a lien for approximately $71,000 plus interest.

But personal property liens are harder to act upon, because ownership isn’t as clear and equipment can be easily transported. There is also no clear process for foreclosure on equipment, as there is with real estate, where the town would own the newspaper’s land and buildings 18 months after a lien is filed.

The Times Record still owes the town the same amount as it did six months ago, and so far, no bank has stepped in to pay off the newspaper’s unpaid taxes – something that Eldridge said he was hoping for. He said the town is now considering further action against the newspaper, which could include seizing and selling the paper’s equipment.

On July 21, Brown told the newspaper the town of Brunswick would no longer pay for advertising.

Instead, the tax office is applying the amount Brunswick would have spent on ads to the newspaper’s unpaid taxes. According to Eldridge, last month the town reduced the newspaper’s tax liability by more than $2,200.

The tax offset was news to Town Council Chairwoman Joanne King, who called it “fascinating.”

“It doesn’t sound like a good municipal practice. I don’t understand why we would trade services with anybody, I have never ever heard of such a thing,” King said. “That seems like something that should be discussed at council level, because it sounds like a special deal.”

Eldridge said the offset is a tool the Finance Department has used in the past with other delinquent taxpayers.

“We would do it for anybody where we’ve engaged in a service,” he said. “… It just happens that this is huge amount of tax.”

McBride, the media ethicist, said she didn’t think there was anything wrong with the tax offset, and described it as “a wash, ethically.”

“It probably makes it harder on (The Times Record) because it reduces their cash flow,” she said.

Brown said the town doesn’t give the newspaper special treatment, and has actually been more aggressive about pursuing The Times Record’s unpaid taxes than with other delinquents, because of the the amount of money the newspaper owes.

“We don’t treat them any differently than any other taxpayer,” he said.

To McBride, the trouble at The Times Record is yet another sign that the crisis in newspapers is far from over, since smaller dailies were once thought to be immune to the financial problems faced by larger papers.

“Maybe what this means is that the crisis in newspapers is reaching into the most insulated places,” she said.

L.C. Van Savage, the former writer for The Times Record who filed a small claims case against the newspaper, said she would have been more sympathetic if the paper had only told her what was going on.

“If somebody from the paper had simply called and said ‘we are having financial problems, would you write for us for free,’ … I would have done it in a blink,” she said.

Instead, the paper’s editors and publisher stopped returning her emails and phone calls.

“It was creepy, it was like we all just vanished,” she said. “If I had ever gotten an answer from them, I would have just dropped the whole thing.”

Emily Guerin can be reached at 781-3661 ext.123 or Follow her on Twitter: @guerinemily.

Sidebar Elements

The Times Record building at 3 Business Parkway, Brunswick.

Brunswick’s top tax delinquents

BRUNSWICK — Some of the town’s most recognizable businesses are also its largest tax delinquents.

The Times Record newspaper, developer George Schott, and the now-defunct Thibeault Oil are all late on their 2010 real estate and/or personal property tax payments.

The Times Record tops the list, with a total of almost $153,000 in unpaid taxes and interest charges as of July 18. 

Auburn-based developer Schott owes the second largest amount, $44,000, for his Gurnet Road properties. Schott purchased the five lots in 2008 when they were home to the Atrium Inn & Convention Center. The land has remained vacant since the buildings were torn down.

“I’d love to do something with (the properties),” Schott said, “but there’s nothing in the works that I know of.”

Thibeault Oil Service owners Conrad and Vivian Thibeault owe nearly $19,000 in personal property taxes and just over $12,000 in real estate taxes. William Howison, trustee in the Thibeault bankruptcy, said the town will definitely recover the real estate taxes, but said the personal property tax revenue is up in the air.

Many of the Thibeault assets were sold at an auction in April, but Howison said the proceeds weren’t even enough to satisfy the amount owed to the bank.

Tax revenue makes up 57 percent of next year’s town budget, approximately $29 million.

“It’s our main revenue stream,” explained Julie Henze, deputy finance director. “Collection of taxes is cash flow.”

Brunswick doesn’t have a cash-flow problem, and unpaid taxes have never affected the town’s ability to do business. But in a worst-case scenario, the town could end up owning a lot of foreclosed property and not have enough money to provide services or pay employees, Henze said.

Every year, the town anticipates that some businesses and residents won’t pay on time, and allocates $200,000 to the budget to compensate for that lost revenue.  

Unpaid real estate taxes are easier to collect since Brunswick has the ability to foreclose on property. But unpaid personal property taxes are trickier. The town can take someone to court, but even then, there is no way to make the tax delinquent pay.

For example, JS Boatworks, a former Turner Street boat dealer, has 10 years of unpaid personal property taxes totaling just under $13,000.

The town took the company to court in 2006 and received a judgment, but has so far been unable to collect, and has been unable to find other assets, like a local bank account.

Others on the top 10 list of tax delinquents (as of July 18)  include:

• Jordan Associates, approximately $35,000.

• Parsons Creek Properties, approximately $16,000.

• Anshi Hospitality, approximately $13,000.

• Bowie Home Construction, approximately $10,000.

• Maine Mattress & Futons, approximately $10,000 from 2010 and $10,500 from 2009.

• And J&A Construction Co., approximately $9,500.

— Emily Guerin

The Times Record building at 3 Business Parkway, Brunswick.